The pre-Jackson regime that allowed the recovery of success fees and after-the-event insurance premiums from losing defendants was compatible with the European Convention on Human Rights, the Supreme Court ruled today.
In the heavily anticipated decision in Coventry v Lawrence  UKSC 50, the expanded panel of seven justices was not united in its ruling, with Lord Clarke, who as Master of the Rolls (MR) commissioned the Jackson report, and Lady Hale dissenting.
The current MR, Lord Dyson, and his predecessor Lord Neuberger, the president of the Supreme Court, gave the main judgment together, with which Lords Sumption and Carnwath agreed.
They said the issue was not whether the system was unfair or had flaws – rather it was whether it was a disproportionate way of achieving a legitimate aim.
“In our judgment, there is a powerful argument that the 1999 [Access to Justice] Act scheme is compatible with the convention for the simple reason that it is a general measure which was (i) justified by the need to widen access to justice to litigants following the withdrawal of legal aid; (ii) made following wide consultation and fell within the wide area of discretionary judgment of the legislature and rule-makers to make.”
The judges observed that the potential unfairness of the 1999 Act scheme on unsuccessful litigants was mitigated by the fact that district judges and costs judges would perform the role of “watchdog”. They added: “Nor should it be overlooked that respondents could themselves enter into CFAs and take out ATE insurance.”
Lords Neuberger and Dyson concluded that while in some individual cases the scheme might be said to have interfered with a defendant’s right of access to justice, it was necessary to concentrate on the scheme as a whole.
“[It] was a rational and coherent scheme for providing access to justice to those to whom it would probably otherwise have been denied. It was subject to certain safeguards.
“The government was entitled to a considerable area of discretionary judgment in choosing the scheme that it considered would strike the right balance between the interests of appellants and respondents whilst at the same time securing access to justice to those who would previously have qualified for legal aid.
“It had to find a solution to the problem created by the withdrawal of legal aid. The government has now produced three different schemes. Each was produced after wide consultation. Each has generated considerable criticism.
“As already indicated, once civil legal aid was constrained to the extent that it was in 1999, it became impossible to come up with a solution which would meet with universal approval.”
They also decided that the fact the Court of Appeal “actively shaped the law relating to additional liabilities throughout the period from 2000 until 2013” implied that they were recoverable.
“In these circumstances, litigants and their lawyers had a legitimate expectation that the court would not (at least without reasonable notice) decide that these fees were in principle incompatible with the convention.”
In his dissenting judgment, Lord Clarke said the scheme was “plainly” a disproportionate way of achieving the legitimate aim “because it did not treat all respondents in the same way but chose a particular class of respondents on whom to impose liabilities far beyond the bounds of what was reasonable or proportionate”.